DreamWorks axes 500 staff

DreamWorks Animation studio, responsible for the likes of the Shrek and Kung-Fu Panda movie franchises, is laying off almost a quarter of its workforce as part of a restructuring of its animated film business following a string of box office flops.

The company said it would cut 500 positions and incur a $290 million charge following the restructuring, which should be complete by the end of 2015.

Jeffrey Katzenberg, DreamWorks Animation’s chief executive, said the company would reduce its production from three films a year to two. DreamWorks Animation increased its production to three films a year in 2010 but Katzenberg conceded this had been a mistake. “I don’t think we ever retained the creative capacity to maintain the highest level of quality while we went for the quantity,” he said.

Dreamworks Animation will take an $80 million writedown on its most recent movie, The Penguins of Madagascar and another release, Mr Peabody and Sherman, which put in a disappointing performance at the box office. It will incur an additional $80 million – $100 million charge based on a valuation of deferred tax assets, offset by a decrease in payments due to Paul Allen, the Microsoft co-founder and a former DreamWorks Animation shareholder.